Luxury watch hire firm is a ticking timebomb, says TONY HETHERINGTON

P.S. writes: I wish I had seen your excellent articles on Incrementum Funding and Paragon Time Trading earlier. My mother has dementia and my brother and I are investing the proceeds of selling her flat in order to help with care home fees.

In July, I was called by Incrementum and told that any capital invested was assured because shares in Paragon were backed by an equal value in luxury watches. We invested £40,000 – but it gets worse.

When we returned from holiday in September, another Incrementum salesman called to say Paragon was in talks to be bought by a Dutch firm. We were offered a higher dividend, and we invested another £25,000. Now one Incrementum phone number is unavailable and the other is unanswered, and nobody answers the phone at Paragon either.

Share sale: Paragon rents out watches

It was only a matter of time before this dubious scheme to rent out luxury watches hit big trouble. I warned twice in August that IFRC Consultants Limited – which calls itself Incrementum Funding – was not licensed to sell shares to the public, and that serious unanswered questions hang over Paragon Time Trading itself.

Incrementum should be authorised by the Financial Conduct Authority in order to market shares. But there is a legal exemption for firms that only deal with ‘sophisticated investors’, people who are experienced enough to judge the risks – or well off enough to stand any losses.

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As it happens, you and your brother are experienced investors, and fairly well off, so this is one legal trap that Incrementum has sidestepped this time. But none of this means you can be given false or misleading information to persuade you to invest.

Paragon’s owner, who stands to make a fortune if the company raises the £1.8million pricetag placed on its shares, is Richard Ludgate. But according to Ludgate, there is a second director, Samuel Tyler.

Paragon owner Richard Ludgate

The share prospectus says: ‘Samuel is responsible for driving membership, affiliate partnership, and strategic partnership sales.’ He has, it claims, ‘run a successful company within IT and marketing for the last six years.’

Oddly though, Companies House has no record of Tyler as either a Paragon director or shareholder.

A letter issued to prospective investors over Ludgate’s name says: ‘Due to my own previous client base and private networking, we have currently secured members for 60 per cent of our membership packages.’

This is remarkably successful for a fledgling business. These packages are priced at between £2,500 and £275,100 a year, giving members access to top of the range watches for special events or just for everyday wear.

Yet you have told me that when you challenged Ludgate, he told you most of his company’s business is short- term hiring to customers who want a posh watch for a one-off weekend event, with little by way of long-term membership.

You also have real doubts about Paragon’s marketing page on Facebook, which appears to have more than 2,600 people ‘following’ it. Again, a remarkable success for a tiny new company.

Of course, Paragon did not sell its own shares. Sales were made by the separate Incrementum Funding, run by Timothy Sandhu. When I exposed one of its salesmen, Spencer George, as a previous pusher of dodgy carbon credit investments, Sandhu dumped him.

But this does not explain Incrementum’s illegal sales to unsuitable investors. Nor does it shed any light on talk of an offer from a Dutch firm to buy up the whole of Paragon, with a price of 85p a share quoted to you in the second sales call you received from Incrementum. With the shares on offer right now at 60p apiece, why on earth would Sandhu or Ludgate carry on selling them if they could rake in 85p just by holding back a while?

I put all these questions to Ludgate and Sandhu, but neither has offered any comment or explanation. You have told me that Ludgate agreed to repay you more than a week ago, but as The Mail on Sunday goes to press, no refund has arrived, and no dividend either.

The blunt fact is that Paragon shares have been sold illegally to unsuitable investors and with false claims. It is the job of the Financial Conduct Authority to investigate what it calls ‘perimeter issues’ – people acting as brokers, bankers and so on, without permission.

It is now a month and a half since The Mail on Sunday exposed Incrementum’s unlawful activity. The regulator told me: ‘We will take action whenever there is sufficient evidence of misconduct.’

But it refuses to say whether it considers the evidence published here is ‘sufficient’ to justify an investigation. Yet what use is a watchdog that will not leave its cosy Canary Wharf kennel? It looks increasingly as though you and your brother will have to sue to recover your mother’s money.

Sorry, creditors are first in line

Ms C. J. writes: My son bought a property on Canvey Island in Essex, and when he took out the home loan he had insurance through Mortgage Agency Services Six Ltd. So though he was later made bankrupt, the mortgage was paid. He was discharged from bankruptcy in 2008 but died in 2014. Last year, a letter arrived to say he was due more than £14,000 from the insurance as his mortgage was repaid early. I have sent the necessary paperwork, but the payment is still being withheld.

M Agency Services Six is an offshoot of the Co-operative Bank so I asked staff at its head office to see what was delaying the payment. They explained that because the insurance policy covered the time your son was bankrupt, they needed clearance from the Insolvency Service before they could hand over the money. They had requested this and were waiting for an answer.

So I spoke to the Insolvency Service, and am afraid I can offer no good news. The policy was active at the time your son was made bankrupt, which means the proceeds from it – which should have been paid when the mortgage was redeemed – now go to the Official Receiver and will be distributed to your son’s unpaid creditors.